ECON 460 Lecture Notes - Lecture 11: Classical Economics, Absolute Advantage, Perfect Competition

• School: McGill University
• Department: Economics
• Course: ECON 460
• Professor: William Watson

Document Summary

Different technical advantages in different countries => different prices => possibility of trade. Price of cloth in portugal [1. 125w/1c] = 90/80. Price of wine in england [1. 2c/1w] = 120/100. Price of wine in portugal [. 88c/1w] = 80/90. The english can profit however by trading cloth with portugal and portugal can also benefit from this trade. Portugal will produce wine and stop production of cloth. England will produce cloth and stop production of wine. If the ratio of pri(cid:272)e (cid:271)etwee(cid:374) wi(cid:374)e a(cid:374)d (cid:272)loth is the sa(cid:373)e i(cid:374) ea(cid:272)h (cid:272)ou(cid:374)tr(cid:455), the(cid:374) there wo(cid:374)"t (cid:271)e a(cid:374)(cid:455) need to trade. If the difference in price is the same as the transport costs= trade will take place. A proletarian is someone selling their labour for cash. A bourgeois is someone who owns land. Marx is describing the modern world= cut throat competition, attempts to monopolize, intensive investment, takeovers and mergers, etc.